MCLEAN, Va., Jan. 19 /PRNewswire-FirstCall/ -- Capital One Financial
Corporation (NYSE: COF) today announced 28 percent earnings per share growth
for 2004. The company reaffirmed its earnings per share guidance for 2005 to
be between $6.60 and $7.00 per share (fully diluted).

Earnings were $1.5 billion, or $6.21 per share (fully diluted), for the
year compared with $1.1 billion, or $4.85 per share, in 2003. Earnings for the
fourth quarter of 2004 were $195.1 million, or $.77 per share (fully diluted),
compared with $265.7 million, or $1.11 per share, for the fourth quarter of
2003, and $490.2 million, or $1.97 per share, in the previous quarter. Higher
marketing and provision expenses in the fourth quarter accounted for the lower
earnings compared to the previous quarter and fourth quarter of 2003.

"Capital One generated strong earnings and loan growth again in 2004, as
it has each year since its initial public offering ten years ago," said
Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "The
company is well positioned for continued success in 2005 in both our US credit
card and our growing and profitable diversification businesses."

During the fourth quarter, managed loans grew $4.4 billion from $75.5
billion to $79.9 billion. Annual growth in managed loans was $8.6 billion, or
12 percent, from December 31, 2003. The company continues to expect that
managed loans will grow at a rate of between 12 and 15 percent during 2005.

The managed charge-off rate increased to 4.37 percent in the fourth
quarter of 2004 from 4.05 percent in the previous quarter, but decreased from
5.32 percent in the fourth quarter of 2003. The increase in the managed
charge-off rate in the fourth quarter of 2004 included a one-time 10 basis
point effect from a change in our charge-off recognition policy for auto loans
in bankruptcy. The company continues to expect its quarterly managed charge-
off rate to stay between 4.0 and 4.5 percent in 2005, with seasonal
variations. Additionally, the company increased its allowance for loan losses
by $110 million in the fourth quarter of 2004, largely driven by the growth in
reported loans. The company expects a seasonal reduction in its allowance for
loan losses in the first quarter of 2005, and a likely increase for full
year 2005.

The managed delinquency rate (30+ days) decreased to 3.82 percent as of
December 31, 2004 from 3.90 percent as of the end of the previous quarter. The
managed delinquency rate as of December 31, 2003 was 4.46 percent. Capital
One's managed revenue margin decreased to 12.66 percent in the fourth quarter
of 2004 from 13.03 percent in the previous quarter. The company's managed
revenue margin was 13.89 percent in the fourth quarter of 2003.

"Return on managed assets for 2004 increased to 1.73 percent from 1.52
percent in 2003," said Gary L. Perlin, Capital One's Chief Financial Officer.
"Although we expect to see a modest decline in our revenue margin in 2005 from
our ongoing diversification and bias towards lower loss assets, we expect to
continue to improve our operating efficiency and thus maintain a return on
managed assets of between 1.7 and 1.8 percent in 2005, with some quarterly
variability."

Fourth quarter marketing expenses increased $193.4 million to $511.1
million from $317.7 million in the previous quarter, largely due to the launch
of several new programs. Marketing expenses were $290.1 million in the fourth
quarter of 2003. Marketing expenses for 2004 were $1.3 billion, a 20 percent
increase over the $1.1 billion in 2003. The company expects annual marketing
spend for 2005 to be similar to 2004.

Annualized operating expenses as a percentage of average managed loans
increased to 5.44 percent in the fourth quarter of 2004, from 5.35 percent in
the previous quarter and decreased from 5.82 percent in the fourth quarter of
2003. Included in fourth quarter 2004 operating expenses were charges totaling
$42.1 million for a combination of employee termination benefits and continued
facility consolidations. The company expects about $50 million in additional
restructuring charges in 2005 related to programs initiated in 2004.

In the fourth quarter of 2004, the company completed the sale of its
French loan portfolio and recorded a gain of $41.1 million, which is included
in non-interest income. As announced during the second half of 2004, the
company signed definitive agreements to acquire HFS Group, Onyx Acceptance
Corporation, and eSmartloan. During the first quarter of 2005, Capital One
completed the HFS and Onyx transactions, as well as the acquisition of
InsLogic, a small insurance brokerage firm. The company expects to close the
eSmartloan acquisition later in the first quarter of 2005.

The company generates earnings from its managed loan portfolio, which
includes both on-balance sheet loans and securitized (off-balance sheet)
loans. For this reason, the company believes managed financial measures to be
useful to stakeholders. In compliance with Regulation G of the Securities and
Exchange Commission, the company is providing a numerical reconciliation of
managed financial measures to comparable measures calculated on a reported
basis using generally accepted accounting principles (GAAP). Please see the
schedule titled "Reconciliation to GAAP Financial Measures" attached to this
release for more information.

The company cautions that its current expectations in this release, in the
presentation slides available on the company's website and on its Form 8-K
dated January 19, 2005 for 2005 earnings, charge-off rates, revenue margins,
return on assets, allowance for loan losses, loan growth rates, marketing, the
composition of loan growth, restructuring charges, and tax rate are forward-
looking statements and actual results could differ materially from current
expectations due to a number of factors, including: continued intense
competition from numerous providers of products and services which compete
with our businesses; changes in our aggregate accounts and balances, and the
growth rate and composition thereof; the company's ability to continue to
diversify its assets; the company's ability to access the capital markets at
attractive rates and terms to fund its operations and future growth; changes
in the reputation of the credit card industry and/or the company with respect
to practices or products; the success of the company's marketing efforts; the
company's ability to execute effective tax planning strategies; the company's
ability to execute on its strategic and operating plans; and general economic
conditions affecting consumer income and spending, which may affect consumer
bankruptcies, defaults, and charge-offs.

A discussion of these and other factors can be found in Capital One's
annual report and other reports filed with the Securities and Exchange
Commission, including, but not limited to, Capital One's report on Form 10-Q
for the quarter ended September 30, 2004.

About Capital One

Headquartered in McLean, Virginia, Capital One Financial Corporation
(http://www.capitalone.com) is a bank holding company whose principal
subsidiaries, Capital One Bank and Capital One, F.S.B., offer consumer lending
products and Capital One Auto Finance, Inc., offers automobile and other motor
vehicle financing products. Capital One's subsidiaries collectively had 48.6
million accounts and $79.9 billion in managed loans outstanding as of December
31, 2004. Capital One, a Fortune 500 company, is one of the largest providers
of MasterCard and Visa credit cards in the world. Capital One trades on the
New York Stock Exchange under the symbol "COF" and is included in the S&P 500
index.

NOTE: Fourth quarter 2004 financial results, SEC Filings, and fourth
quarter earnings conference call slides are accessible on Capital One's home
page (http://www.capitalone.com). Choose "Investors" on the bottom right
corner of the home page to view and download the earnings press release,
slides, and other financial information. Additionally, a webcast of today's
5:00pm (EST) earnings conference call is accessible through the same link.

The Company's consolidated financial statements prepared in accordance
with generally accepted accounting principles ("GAAP") are referred to as its
"reported" financial statements. Loans included in securitization
transactions which qualified as sales under GAAP have been removed from the
Company's "reported" balance sheet. However, servicing fees, finance charges,
and other fees, net of charge-offs, and interest paid to investors of
securitizations are recognized as servicing and securitizations income on the
"reported" income statement.

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